THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, for all of you who are all sitting on your -- what did you call them? No.

As I said, small business is probably as vulnerable as anybody. And one of the things that Max has been working very hard on -- and this just doesn't get advertised, so I just want to make sure everybody's paying attention here. One of the things we're trying to do is gave a substantial subsidy to help small businesses allow their employees to get health insurance, because there are a lot of employers just like you who want to do the right thing but they're a small shop, they're operating on small margins, they've got no leverage with the insurance companies. So, there are two ways we want to help.

Number one, we want the small business to be able to buy into the exchange. That allows you then to use the purchasing power of everybody who's in the exchange to get the best rates from the insurance companies. That, right away, would drive down the premiums that you'd have to pay.

And the second thing we want to do is for employers who are doing the right thing and providing health insurance that is real, then we want to give you a tax break so that it's easier for you to make your bottom line.

Now, this is something that a lot of small businesses will benefit from. Nobody's talking about it. And since small businesses are the place where you're seeing the fastest job growth, it makes sense for us to provide this kind of protection. This, I guarantee you, will end up being an important component of whatever we pass out of Washington.

All right?

(APPLAUSE)

Now, I've only got time for one more question. And it's a guy's turn, and I want somebody who's got a concern or is skeptical about health care reform.

Here we go. There we go. I knew we could find a couple here, so I'll call on this gentleman right here in the pale blue shirt. And hopefully that list is not too long. All right. Go ahead. Introduce yourself, though.

MONTGOMERY: All right. I appreciate you coming here. It's great to be able to do this.

OBAMA: Thank you.

MONTGOMERY: Mr. President, I make a living selling individual health insurance. OK? Obviously, I paid very close attention to this insurance debate.

OBAMA: Right.

MONTGOMERY: As you know, the health insurance companies are in favor of health care reform and have a number of very good proposals before Congress to work with government to provide insurance for the uninsured and cover individuals with pre-existing conditions.

Why is it that you've changed your strategy from talking about health care reform to health insurance reform and decided to vilify the insurance companies?

OBAMA: OK. That's a fair question. That's fair question.

First of all, you are absolutely right that the insurance companies in some cases have been constructive. So, I'll give you a particular example.

Aetna has been trying to work with us dealing with some of this pre-existing stuff, and that's absolutely true. And there are other companies who have done the same.

Now, I want to just be honest with you, and I think Max will testify, that in some cases, what we've seen is also funding in opposition by some other insurance companies to any kind of reform proposals. So, my intent is not to vilify insurance companies. If I was vilifying them, what we would be doing would be to say that private insurance has no place in the health care market, and some people believe that.

I don't believe that. Right? What I've said is, let's work with the existing system. We've got private insurers out there, but what we do have to make sure of is that certain practices that are very tough on people, that those practices change.

Now, one point I want to make about insurance, some of the reforms that we want for the insurance market are very hard to achieve unless we've got everybody covered. This is the reason the insurance companies are willing to support reform, because their attitude is, if we can't exclude people for pre-existing conditions, for example, if we can't cherry-pick the healthy folks from the not so healthy folks, well, that means that we're taking on more people with more expensive care. What's in it for us?

The answer is, if they've got more customers, than they're willing to make sure that they are eliminating some of these practices. If they've got fewer customer, they're less willing to do it.

So, it's important for people -- when people ask me sometimes, why don't you just do the insurance reform stuff and not expand coverage for more people? My answer is, I can't do the insurance reform stuff by itself. The only way that we can change some of the insurance practices that are hurting people now is to make sure that everybody's covered and everybody's got a stake in it, and then the insurance companies are able and willing to make some of these changes that will help people who have their insurance right now.

But thank you for the question. I appreciate it.

(APPLAUSE)

All right. You know, I'm going to -- even though I shouldn't do this, I'm going to take one more question. And I'm going to call on this person right here to get the last word. Right here.

UNIDENTIFIED FEMALE: Thank you.

OBAMA: Go ahead.

UNIDENTIFIED FEMALE: Thank you, Mr. President, and thank you for coming to Bozeman and bringing your beautiful family to the last best place in the world.

(APPLAUSE)

UNIDENTIFIED FEMALE: Because you're a constitutional scholar, I think it would be terrible to let you escape from Montana without sharing with you the most perfect preamble to a constitution -- of any state constitution.

OBAMA: Oh, OK. Well, I want to hear this. This is a good way to end our town hall.

UNIDENTIFIED FEMALE: It is. It is.

"We, the people of Montana, grateful to God for the quiet beauty of our state, the grandeur of our mountains, the vastness of our rolling plains, and desiring to improve the quality of life, the quality of opportunity, and to secure the blessings of liberties for this and future generations, do ordain and establish this Constitution."

I hope you take a look at the whole Constitution. You'll like it. Thank you.

OBAMA: Well, that's very nice. Well, thank you.

Listen, Montana, you've been terrific. I hope this has been informative. Thank you for the questions.

Let's get to work.

Thank you.

(APPLAUSE)

WOLF BLITZER, CNN ANCHOR: The president of the United States shaking hands.

We're going to keep this picture up for our viewers as he stays inside that hangar in Belgrade, Montana, where he just wrapped up about a one-hour Q&A session. He had an opening statement on health care reform, then he took questions, including a couple tough questions that he answered directly.

We'll continue to watch the president here in THE SITUATION ROOM.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer reporting.

Our Senior White House Correspondent Ed Henry is in Montana. He was watching closely, as well.

Brianna Keilar, our congressional correspondent, is in Arkadelphia, Arkansas, where another Democratic congressman, a so- called Blue Dog moderate, or conservative Democrat, is holding his own town hall meeting. We're going to get to Brianna in a moment.

But the president answered those questions, including the tough questions, head on, Ed, including a promise that he reiterated that he made during the campaign -- there will be no tax increases for people earning less than $250,000 a year to pay for health care or, for that matter, anything else.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: That's right, Wolf.

There had been a lot of talk before this event that maybe the president would experience some of the tough question, some of the anger that we've seen at some other town hall meetings across the country. Instead, this was pretty civil, pretty straightforward, maybe only a couple of really tough questions. One of them, as you mentioned, on taxes.

Very important to highlight. There was a man who identified himself as a member of the National Rifle Association, and was pretty tough in pressing the president in saying, look, you're not going to be able to pay for this. He was very direct, very blunt, and saying you're not going to be able to pay for all this change without raising our taxes.

Now, the president did push back in one respect by saying, look, you're not going to get something for nothing. There are probably going to be some taxes raised. But as you point out, Wolf, which is very important, that he's talking about raising taxes on people making over $250,000 a year. The president reiterating this campaign promise that he won't raise taxes on people making under $250,000.

I think if you take a step back from this, I've been talking to a lot of people here in Montana who expressed some of the concern that that gentleman from the NRA expressed, and these were people who identified themselves to me as Obama voters. But they say they agree with the president there's a crisis, they want to see him get something done, but they're very worried about government control, about too much reform, too big of an effort. And they're saying that there's a lot of fatigue here after, you know, the TARP bailout of $700 billion, the stimulus cost of $787 billion.

And that's clearly something the president is trying to push back on, head on. Because when you talk to top White House advisers in private, top White House aides acknowledge that the opposition has been very good in highlighting this government anger out there. We've seen that reflected in other town hall meetings, and they realize they need to step up their pushback on that -- Wolf.

BLITZER: I want to play a little clip, Ed, of what the president said, one of the specific lines of attack in defending his health insurance reform package.

Listen to this.

Unfortunately, we don't have that clip right there, but we're going to queue it up and get it ready.

Ed, the president was also pretty forceful in making it clear that, for him, the health insurance companies out there, it's a personal matter going back to the illness and subsequent death of his own mom.

HENRY: He talked very personally, he's done this before, but he again talked about in saying that when his own mom was dying of cancer, she was nervous that she was going to be dropped by an insurance company. And he's trying to highlight that that is a fear that a lot of Americans have and that they should not rest comfortably that just because they're not among the 46 million who are uninsured, it doesn't mean that they're safe and secure.

So, that is why the president is really trying to highlight that -- Wolf.

BLITZER: Ed, stand by. We're going to be getting back to you.

From Big Sky Country to the Deep South, the relative calm was also happening at a forum with a Blue Dog Democrat, a moderate or conservative congressman named Mike Ross of Arkansas. The congressman himself did have some harsh things to say about his own party leaders.

(BEGIN VIDEO CLIP)

REP. MIKE ROSS (D), ARKANSAS: I led an effort and stood up to President Obama and to Speaker Pelosi, and we won delaying any floor vote on health care reform to September, at the earliest.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: Let's go to Brianna Keilar. She's down in Arkadelphia, Arkansas, with more on this part of the story.

What else happened, Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, compared to some of the other town hall meetings that we've seen, some very contentious town hall meetings, this one was almost a love-fest.

It started with a standing ovation as soon as Congressman Mike Ross was introduced. He, of course, is a prominent Blue Dog Democrat, a fiscally conservative Democrat. He and some other Blue Dogs forced House Democratic leaders to postpone a vote on their health care reform proposal until after Congress comes back in September.

That said, he also support many of the things in this health care reform push. But talking with some of the constituents, those who are for this health care reform push, those who are against it, they say that they think Congressman Mike Ross is really doing right by them.

There's about 700 people at this event. We were able to speak with about a dozen of them going into the meeting.

Some of them are concerned that this is tantamount to a government takeover. Some of them say that health care reform can't come soon enough and they support the Democrats' push.

All of them, Wolf, though, that we spoke with said that the health care system is not well and they stand behind Mike Ross. They're very supportive of what he's done so far -- Wolf.

BLITZER: And I think we have a little clip of another excerpt of what he had to say. Let's play that.

(BEGIN VIDEO CLIP)

ROSS: I led an effort and stood up to President Obama and to Speaker Pelosi, and we won, delaying any floor vote on health care reform to September at the earliest.

(APPLAUSE)

And by the way, the president has said the changes that we have made have made the bill better.

(END VIDEO CLIP)

BLITZER: We'll see if he stays firm on that.

I'm going to have you stand by as well, Brianna.

Brianna is in Arkadelphia, Arkansas, watching what's going on.

Here's a question. How can you find out if your representative is holding a town hall in your area? Go to CNN.com/healthcare. You'll find ongoing coverage of all the town halls and simple answers to some of the complex issues that are out there.

You go to CNN.com/healthcare.

Let's check in with Jack Cafferty for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the United States will soon be entering its ninth year since the invasion of Afghanistan, and the war could be far from over.

Defense Secretary Robert Gates says it will take "a few years" to defeat the Taliban and al Qaeda and larger-scale success there will take even longer. Gates describes how long U.S. troops will be in the country as a mystery, saying there are too many variables to be able to predict, variables like the Taliban, who are in control of more and more of the country. This means insurgent attacks are up.

Last month, 49 coalition troops killed in bomb attacks. That compares to eight during the same time last year.

Some think more troops are the answer. There are now 62,000 U.S. troops in Afghanistan, another 6,000 on the way. Secretary Gates says the top commander there won't be asking for more troops right now, but some expect him to eventually ask for another 10,000 troops.

Meanwhile, the U.S. has spent more than $220 billion in Afghanistan since 2001 and is now spending about $4 billion a month. But that still may not be enough.

A new Senate report paints a grim picture of the security situation in Afghanistan and makes clear the U.S. needs to send more troops and civilians. Officials tell Senate investigators progress in Afghanistan, if it comes, would be incremental, talking about anywhere from two to 10 years.

So, here's the question: Should the United States spend a few years in combat in Afghanistan?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Jack, thank you.

An 11-year-old reporter gets the interview of a lifetime.

(BEGIN VIDEO CLIP)

BLITZER: How excited were you?

DAMON WEAVER, REPORTER: I was very excited, and it was very unexpected.

(END VIDEO CLIP)

BLITZER: Excited because he got a chance to do what some reporters never do. That would be interview the president of the United States.

Wait until you hear what Damon Weaver tells us he spoke about with the president.

And California is burning. At least parts of it are being swallowed by fast-moving fires. How much damage and how many more evacuations before they're contained?

(COMMERCIAL BREAK)

BLITZER: President Obama has wrapped a one-hour town hall in Belgrade, Montana. This is when he arrived with his family just before that town hall, received by the governor.

We're going to be speaking, by the way, with the governor of Montana, Brian Schweitzer. He's gong to be here in THE SITUATION ROOM. That's coming up.

We're also trying to speak with some of those who asked the president some of those tough questions at that town hall and get their sense if the president really answered their questions.

All that coming up. We'll go back to Montana in a few moments.

But right now there's another story we're watching, and it involves an 11-year-old. Most 11-year-olds are simply enjoying the last days of summer before school starts, but one of them is hard at work. He was over at the White House earlier in the day.

BLITZER: You interviewed the president of the United States yesterday in the White House. And I have a little clip. I'm going to play this clip, and then I want to talk about it with you.

All right. Listen to this.

(BEGIN VIDEO CLIP)

WEAVER: Your mom always made sure that you were doing well in school. What should parents do to make sure their child's education is better?

OBAMA: Well, I think parents are the most important thing to any child's ability to do well in school. So, making sure that you're reading to your child, especially when they're young, even before they get to school, so that they start being used to reading and they know their alphabet, they know their -- the basics so that even when they get to kindergarten they're already a leg up.

I think it's important to make sure that kids are doing their homework and that they're not just turning on the TV all day or playing video games.

I think talking to teachers and finding out from teachers directly what can be done to improve their child's performance, that's very, very important.

And, you know, setting a really high standard for kids, saying to them, if you get a B, you can do better. You can get an A. Making sure that we have high expectations for all children, because I think all children can do well as long as they have the support that they need.

WEAVER: Do you have the power to make the school lunches better?

OBAMA: Well, I remember when I used to get school lunches, sometimes they didn't taste so good, I've got to admit. We are actually seeing if we can work to make school lunches healthier, because a lot of school lunches, you know, there's a lot of French fries and pizza and Tater Tots and all kinds of stuff that, you know, isn't a well-balanced meal.

And so, what we want to do is make sure that there are more fruits and more vegetables in the schools now. Kids may not end up liking that, but it's actually better for them. It will be healthier for them, and those are some of the changes that we're trying to make.

WEAVER: I suggest that we have French fries and mangos every day for lunch.

OBAMA: See, you know -- and if you were planning the lunch program, it would probably taste good to you, but it might not make you big and strong like you need to be. And so, we want to make sure that food tastes good in school lunches but that they're also healthy for you, too.

WEAVER: I love mangos.

OBAMA: You love mangos? I love mangos, too, but I'm not sure we can get mangos in every school because they only grow in hot temperatures. And, you know, there are a lot of schools up north where they don't have mango trees.

WEAVER: I notice as president you get bullied a lot. How do you handle it?

OBAMA: As president, I get what?

WEAVER: Bullied a lot.

OBAMA: I get bullied. You mean people say mean things about me?

Well, you know, I think that, you know, when you're president, you're responsible for a lot of things, and a lot of people are having a tough time and they're hurting out there. And, you know, the main thing I just try to do is stay focused on trying to do a good job and try to be understanding that sometimes people are going to be mad about things. But if I'm doing a good job, I'm doing my best, and I'm trying to always help people, then that keeps me going.

WEAVER: Were you ever bullied in school?

OBAMA: You know, I wasn't bullied too much in school. I was pretty big for my age. But obviously, you know, it's a terrible thing, bullying. And I hope all young people out there understand that they should treat each other with respect.

(END VIDEO CLIP)

BLITZER: Wow.

Damon, very, very cool, interviewing the president of the United States. How did you get that interview?

WEAVER: Well, I (INAUDIBLE). I know some of his people, and one of his people I hung with today. I had given him a letter, and the letter was asking for an interview.

BLITZER: This was during campaign when you asked him for an interview? Is that right?

BLITZER: And all of a sudden, they called you up and said, Damon, come on over to the White House? Is that what happened?

WEAVER: Yes.

BLITZER: They did?

WEAVER: Mm-hmm.

BLITZER: How excited were you?

WEAVER: I was very excited. And it was very unexpected to me because I was -- that night before, I was playing with my brother talking about I'm getting an interview with Obama. My brother said, stop playing.

BLITZER: Nobody believed you.

WEAVER: Nobody believed me. But I didn't even know that I was getting an interview.

So, that morning, I woke up and went in my mom's room. She said, "Put on some clothes." I said, "For what, Mom? For what?" She said, "We're getting a suit for your interview." I said, "Interview with who?" She said, "Obama."

BLITZER: Is this a new suit that you got for the interview?

WEAVER: No. It's at the hotel.

BLITZER: Yes? This is a suit that you had before?

WEAVER: Mm-hmm.

BLITZER: Because you look very handsome.

So, what was it -- what did you think about the president of the United States?

WEAVER: Well, the president of the United States is very funny. He gives good details, and he's a very good, good guy.

BLITZER: And he was nice. Did he give you a tour of the White House, too, a little bit?

WEAVER: Yes. No, no, no.

BLITZER: He didn't.

WEAVER: But I also got to see his dog, Bo.

BLITZER: Oh, you saw the dog, Bo.

Did you see his two little girls, too?

WEAVER: No.

BLITZER: But you saw Bo in the back yard on the South Lawn?

WEAVER: No. I took a picture with him and I had petted him.

BLITZER: You did pet him. Did you like Bo?

WEAVER: Yes.

BLITZER: All right.

So, what do you do after you interview the president of the United States? I mean, how do you follow up with that? You're only 11 years old.

WEAVER: After the interview with the United States, when I got to the hotel, I went swimming.

BLITZER: You went swimming at your hotel.

WEAVER: Yes.

BLITZER: That was cool. WEAVER: To relax.

(END VIDEOTAPE)

BLITZER: He had to relax.

And you're going to have more of this interview that I had with Damon Weaver and more of his interview with the president of the United States. And then -- he wants to be a journalist, so I let him ask me some questions, as well. I think you'll be interested in what he decided what he wanted to ask me. That's coming up in our next hour.

When we come back, we're going back to Montana. We're going to speak with that gentleman from the NRA, a supporter of the National Rifle Association, who asked that question of President Obama on whether or not he's going to go forward and raise taxes in order to pay for health care reform.

Stay with us. Our coverage continues.

(COMMERCIAL BREAK)

BLITZER: Don Lemon is monitoring some other important stories incoming to THE SITUATION ROOM right now.

Don, what's going on?

DON LEMON, CNN ANCHOR: Hello, Wolf.

The man convicted of bombing Pan Am Flight 103 over Lockerbie, Scotland, more than 20 years ago is dropping his appeal. Abdel al- Megrahi is gravely ill with prostate cancer and he's seeking compassionate release which could allow him to return to his native Libya. The bombing in December of 1988 killed all 259 people on the plane and 11 people on the ground.

Another bank appears to be on the brink of failure. A federal judge has frozen the assets of Colonial Bank, which has 355 branches in five states. There are reports that rival BB&T Bank will buy Colonial's branches and deposits, but not its loans and other assets. Shares in Colonial have plunged 80 percent this year, and, this morning, trading was halted.

A funeral today for Eunice Kennedy Shriver, the founder of the Special Olympics, who died Tuesday at the age of 88. The Special Olympics torch led the procession to the Cape Cod church where the mass was held, and a number of special Olympians attending the private service, along with Vice President Joe Biden, Oprah Winfrey, and Stevie Wonder. Her daughter, Maria Shriver, and her husband, California Governor Arnold Schwarzenegger, helped carry the casket into the church.

And Maria Shriver delivered a eulogy that included a poem.

(BEGIN VIDEO CLIP) MARIA SHRIVER, FIRST LADY OF CALIFORNIA: Thank you, mummy, for giving me the breath of life. Thank you for giving me a push over and over again. Thank you for doing your best.

Here we are, you and me. Now it's you needing the breath of life. Now it's you needing the push. You did it for me. Let me do it for you.

Your love has brought me to my knees. I cannot breathe without you. I cannot think without you. I am lost without you. Here we are, you and me. The clouds are gone. The sky is clear. You are the star in my sky. You are the music in my heart. Do you hear it?

Listen. Listen. Mummy, you are the trumpet of my life.

UNIDENTIFIED MALE: Amen.

SHRIVER: Amen.

(END VIDEO CLIP)

LEMON: At the graveside service, mourners lit candles from the Special Olympic torch. And Shriver's son Tim, now chairman of the organization, asked the athletes there to come forward to be near the casket.

Quite a woman. Quite a woman, Wolf Blitzer.

BLITZER: Yes, our deepest condolences to the family.

(CROSSTALK)

BLITZER: Thanks very much, Don.

And, to our viewers, you're in THE SITUATION ROOM.

Happening now: Michael Vick, he is back in the NFL after serving two years in prison for running a dogfighting ring. Who signed him and what kind of welcome will he get?

President Obama striking back at his critics. He's just wrapped up a -- a health care town hall meeting in Montana. How did it go? I will speak with the state's governor, Brian Schweitzer. He's standing by live.

Plus, a deadly collision puts the spotlight on air traffic controllers who apparently weren't following the rules. One was on the phone. The other wasn't even in the building.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Lots of American families are visiting the country's national parks this summer, but the first family will see two of them in the next two days. Tomorrow, President Obama, the first lady and their daughters will visit Yellowstone National Park. And, on Sunday, they will see the Grand Canyon. Those parks and others are getting hundreds of millions of dollars from the president's economic stimulus package.

CNN's Kate Bolduan is tracking the stimulus for us. She's here in THE SITUATION ROOM watching all of it unfold.

What are you finding out about the actual money that's going forward?

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Wolf.

Well, this weekend, the spotlight is definitely on the country's national parks. And we're taking a look at the $750 million in stimulus money heading their way.

We visited one park just outside Washington that's getting about $5.5 million for things like road repair and rehab on some historic cabins. Other projects include millions for repairs on Washington landmarks, like the Lincoln Memorial Reflecting Pool, and millions more for solar power -- power installation and trail improvements at Mesa Verde National Park -- 800 projects in all nationwide.

We also had the chance today to talk to the acting director of the National Park Service.

(BEGIN VIDEO CLIP)

BOLDUAN: How is money for national parks stimulus?

DAN WENK, ACTING DIRECTOR, NATIONAL PARK SERVICE: It's stimulus because we are putting people to work. We're putting -- we will be putting -- putting people to work for the next two years.

But it's also stimulus because we are creating a better place, increasing the visitor experience. We're bringing tourism back through these stimulus dollars because we are improving our visitor facilities, our campgrounds.

(END VIDEO CLIP)

BLITZER: How much of the stimulus money is actually out there?

BOLDUAN: Well, right now, the National Park Service says that, of the $750 million in -- $750 million total, about 10 percent is in the pipeline, but they also say they're facing a $9 billion backlog of work right now, so a tough road ahead.

And, on this particular stimulus question, some Republican lawmakers say they are simply not buying it. Among their concerns, jobs, the fact that many of the jobs that will be created will only be short-term jobs.

Wolf, more of all of that coming up this weekend. It's all part of our effort of tracking the stimulus all the way.

BLITZER: People love those parks. Let's hope they get better... BOLDUAN: Mm-hmm. Absolutely.

BLITZER: ... in the process and they create some jobs.

BOLDUAN: That's right.

(LAUGHTER)

BLITZER: That's the purpose.

BOLDUAN: Right.

BLITZER: Thanks very much, Kate, for that.

A wildfire burning out of control, thousands of acres burned, thousands of people evacuated -- we're going to get the latest on the desperate effort under way right now by fire crews to get the upper hand.

Plus, a killer typhoon -- now fears the death toll could quadruple. The latest on the frantic search for survivors.

(COMMERCIAL BREAK)

BLITZER: The death toll from Typhoon Morakot that caused widespread flooding and mudslides in Taiwan now stands at 121, but authorities say that number could more than quadruple.

CNN's Pauline Chiou is at the eerie site of one village literally buried in a mudslide.

(BEGIN VIDEOTAPE)

PAULINE CHIOU, CNN CORRESPONDENT: I'm standing on what used to be Hsiaolin village, buried underneath five stories of mud when Typhoon Morakot hit over the weekend.

There were two mudslides that came down, formed a lake. That lake overflowed and washed away the entire village. Authorities believe there were at least 600 residents here when the typhoon hit. There's virtually no sign of life, just debris here and tons of mud.

A rescue crew brought us through Hsiaolin village today, but they know that there are no survivors here, so they kept going through that valley. They're headed towards another town inside the mountains called Namasha (ph). They know that survivors are there. It's just that no ground crew has been able to reach that town all week.

Now that the road to Hsiaolin village is at least passable, a trickle of local residents are coming by to see the damage. We met one woman here who was sitting on a log. She was crying and praying. She lost seven family members in the mudslide here in Hsiaolin village. You have to remember that there are hundreds of bodies buried underneath this mud.

In what used to be Hsiaolin village, Pauline Chiou, CNN. (END VIDEOTAPE)

BLITZER: All right, I want to go back to Montana right now, where the president of the United States, just in the past few moments, wrapped up a one-hour town hall, got some pretty good questions, including this question and answer with one -- one person from Montana.

Listen to this.

(BEGIN VIDEO CLIP)

RANDY RATHIE, QUESTIONED PRESIDENT OBAMA AT MONTANA TOWN HALL MEETING: Max Baucus, our senator, has been locked up in a dark room there for months now, trying to come up with some money to pay for these programs.

OBAMA: Right.

UNIDENTIFIED MALE: And we keep getting the bull. That's all we get is bull. You can't tell us how you're going to pay for this. You're saving here. You're saving over there. You're going to take a little money here. You're going to take a little money there. But you have no money. The only way you're going to get that money is to raise our taxes. You said you wouldn't. Max Baucus says he doesn't want to put a bill out that -- that will, but that's the only way you can do that.

(END VIDEO CLIP)

BLITZER: And the president answered that question.

But I want to get Randy Rathie reaction.

The president, Randy, says he promises he's going to live by his commitment made during the campaign, that he won't raise taxes for anyone making under $250,000 a year, would raise taxes for those making more. Did his answer to you today satisfy you?

RATHIE: Somewhat.

We're going to find out about the president, because he's made some promises. And now he has given me his word personally that he's not going to raise my tax. And I'm a big man on living up to your word, so I'm going to take him for that.

BLITZER: You have -- you have any...

(CROSSTALK)

BLITZER: You have any doubt that he might back away from that commitment?

RATHIE: I don't think he has any choice. If he's going to put health care in, either he's going to leave it unfunded, or I don't know what he's going to do, but they don't have any money. BLITZER: Well, because he made the point that, if they lower the deductions available to people making more than $250,000 a year, instead of being able to deduct for a charitable contribution, let's say, 35 percent or 36 percent, bring it down to 28 percent, he says that will pay for the -- the health -- the health reform that he wants.

RATHIE: I'm not sure that I'm educated enough in this to make that call.

But, if he starts taking money from the wealthy and giving it down here to us other people, then, you know, that's a distribution of wealth. And I don't much care for that.

BLITZER: You don't like that idea either.

What do you think in general of the way the president handled himself in Montana?

RATHIE: Oh, I was well-impressed.

I came here for that reason, to, you know, have a little discourse. I was very fortunate to get asked. And the president handled himself very well and he tried, to the best of his ability, to answer my question.

BLITZER: And -- and I see you have got your NRA, your National Rifle Association, jacket on. You made a point of -- to him, saying you support the Second Amendment to the Constitution. And he pointed out he does as well.

Were you satisfied with that?

RATHIE: I am. I extracted another promise from him, and it's very important, all of our constitutional rights, especially the ones that are in jeopardy that a lot of people want, which is the Second Amendment.

BLITZER: I'm curious how you managed to get a question to the president. Did -- what was the process that you had to go through in order to get that microphone and ask the president of the United States a specific question?

RATHIE: Well, I drove several hundred miles. I slept on a sidewalk to get in line. I was number 215 in line.

Then I waited a day. And then I come back over here. And I have been here about 12 hours today standing in line in order to get in.

And, then, as I got in, when he started asking, I started waving my hand, and I'm not so sure that my NRA jacket didn't catch his eye.

BLITZER: It obviously must have, because it was interesting that he decided to call on you, despite that jacket. But nobody -- nobody questioned you in advance or asked you what your question was going to be? Was there any screening, in other words? RATHIE: Absolutely not.

I -- I would be very upset if somebody tried. And, also, just because I'm an NRA member doesn't mean that I'm not a good American citizen. We are good people. We're concerned about our rights, and only that. We're not -- we're not to be vilified, and we're not bad people.

BLITZER: One final question, Randy. Was it worth it, that huge effort you made, to -- to get there to -- to Belgrade, Montana, and -- and get to ask the president a question?

RATHIE: Absolutely, way high on my list of chance-of-a-lifetime opportunity.

BLITZER: Thanks, Randy. Thanks very much for coming in. Thanks for coming to the town hall. You asked a good, serious, tough question. He gave a good answer. Now we're going to see if he lives up to it, together with you. Appreciate it very much.

RATHIE: Thanks for having me.

BLITZER: In our "Strategy Session:" Was there a deal between the pharmaceutical industry and the White House? I asked the White House Office on Health Reform's communications director this question.

(BEGIN VIDEO CLIP)

BLITZER: So, is part of the deal that they would support this legislation, go forward with $150 million in advertising?

LINDA DOUGLASS, COMMUNICATIONS DIRECTOR, WHITE HOUSE OFFICE OF HEALTH REFORM: You know, Wolf, part of the agreement here is that we're all going to work together to bring comprehensive health reform.

(END VIDEO CLIP)

BLITZER: But is there more going on than she's letting on? We will discuss that. Arianna Huffington, Tony Blankley, they are both standing by live.

And Michael Vick, the convicted canine killer, is now in the City of Brotherly Love. Is it going to greet him with open arms? Mary Snow standing by.

(BEGIN VIDEO CLIP)

MICHAEL VICK, NFL PLAYER: I know, as we all know, in the past...

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story, the president trying to sell his health care reform package. Let's talk about it in our "Strategy Session" with Arianna Huffington of "The Huffington Post" and Republican strategist Tony Blankley. He's executive vice president of Edelman P.R. here in Washington, former spokesman for the House Speaker -- then House Speaker Newt Gingrich.

What did you think? How did it go today, Arianna?

ARIANNA HUFFINGTON, CO-FOUNDER, HUFFINGTONPOST.COM: Well, you know, the president is really good at that. I thought your interview with Randy was very moving. You know, he connects with people, wherever they come from.

The problem is not that. The problem is that he has not been absolutely clear in terms of what is going to be in the health care reform bill that he will support. And I think, until he draws a line in the sand and says some basic things -- there will be a public option, there will be the ability to negotiate for lower costs with the drug industry, there will be prevention -- then people are confused about what exactly is going to be in this bill.

TONY BLANKLEY, REPUBLICAN STRATEGIST: Yes.

HUFFINGTON: And, in this confusion, you can get all these crazy rumors that have been circulating.

BLITZER: I -- I think he's trying to be deliberately ambiguous, to try to get the best deal he can get in these negotiations. That's why he doesn't do what exactly you want him to do.

But, Tony, I'm curious, how -- how did you think the president did during that hour Q&A session?

BLANKLEY: Oh, look, I think he is marvelous in -- in these settings. Transactionally, it's a wonderful moment for him.

The problem is, I -- I think that, strategically, he is not solving the problem that he has, which is that, as the public is coming to think they understand what the issues are, they're breaking against the president.

So, in one sense, it was a marvelous hour. The public saw him in his milieu with -- with all of his charm and -- and forthrightness. On the other hand, it was an hour lost when he could be moving a message. At some point, he's got to move to convince the people who disagree with him to -- to agree with him.

So, it's a -- it's an odd thing, tactically wonderful, strategically, a lost moment, I would say.

BLITZER: How worried are you, if you are -- and I think you are, because I read "Huffington Post," Arianna -- about this secret deal that was negotiated with PhRMA, the pharmaceutical lobby here in Washington, the drug manufacturers?

They got a commitment that there would be X amount of cuts for them over the next 10 years. In exchange, they're going to spend about $150 million in advertising to help President Obama's deal. What do you think about this deal?

HUFFINGTON: Well, you know, it is worrisome on two grounds.

The first one is that the president himself made a promise during the campaign that there will be no ban in negotiations with PhRMA, and that that will result, potentially, in over $300 billion in savings. That was an exact promise.

So, when now we find out that there was actually an agreement that there would be a ceiling at $80 billion, that has two causes of concern. The first is, in itself, it's not something good, because costs are not going to come down as far as they should.

And the other one, in a way, just as important, is that it is emblematic of the kind of business as usual that the president promised to come to Washington to change. And the public goes away with a sense that the fix is in, that, if you're a powerful industry lobby, then you can get away with this behind-the-door negotiations, and that the public does not have the power to be there.

That's why, remember, he had said these negotiations would be happening on C-SPAN. Well, not only are they not happening on C-SPAN. They're creating this back and forth and spin and denial and counterdenial.

BLITZER: It was sort of a deal done with the Senate Finance Committee and Billy Tauzin, the former Republican congressman, Tony, a man you know quite well. He's now the -- the head lobbyist for PhRMA, the pharmaceutical lobby here in Washington.

Do you feel comfortable with this deal?

BLANKLEY: I'm sure you -- I think he was a former Democrat. But...

BLITZER: He was also a former Democrat and a former Republican.

BLANKLEY: Yes.

Look -- by the way, I have to tip my hat to Arianna. She's got the -- the actual memo up on her Web site. It used to be I would check "The New York Times" for leaked memos. Now we go to "The Huffington Post."

But, look, this is business as usual in Washington. There's nothing wrong with it. It's -- the lobbyists and the associations have every right to work with an administration and try to get a bill that works to their interests. And the president has every right to -- to -- to cut these deals.

That's the way the sausage is made. I have been in this town for 30 years. This is what administrations do. You know, maybe the president's got a bit of a problem because he said it was going to be completely different, but I think most of us understood that there's only so many ways to -- to get legislation passed, and -- and this is inherently one of them.

BLITZER: This is still going to cause a lot of heartburn out there. And we're going to continue this conversation in the coming days.

Guys, unfortunately, I have got to leave it right there. Thanks for coming in.

(CROSSTALK)

BLANKLEY: Thank you.

HUFFINGTON: Thank you.

BLITZER: Charismatic and always ready with a colorful comment, that's how many describe the Democratic governor of Montana. President Obama visits his state to talk about health care. The governor surely won't mince words to describe where he agrees and possibly disagrees with the president.

My interview with Governor Schweitzer, that is coming up.

(COMMERCIAL BREAK)

BLITZER: Want to buy some property? How about homes once owned by one of the most notoriously famous swindlers in American history? They belong to convicted swindler Bernie Madoff. And federal officials are asking real estate brokers to put in bids to sell them.

The sales of money would help Madoff's victims.

CNN's Internet reporter, Abbi Tatton, is here.

Abbi, show us where these properties are.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, three luxury properties, this is what's going to be soon on the market. The first owned by Bernard Madoff is a co-op, a luxury penthouse on the Upper East Side of Manhattan valued earlier this year about $7 million by the FBI.

Then we're going to the holiday home out on Long Island, this one a waterfront property -- the contents alone of this one worth about $1.5 million. Those will be sold separately.

And then the second waterfront home -- because you need two, right? -- this one in Palm Beach, Florida, right on the waterfront, again, five bedrooms for that one, neighboring properties go for about $9 million estimated value.

The total of all three of these, the U.S. Marshals Service, puts at about 20-million-plus dollars. But the goal here is to sell them for as much as they can get, because the money would be going to Bernard Madoff's victim, and that's why the U.S. Marshals Service is putting out this appeal to real estate agents, saying, tell us why you're the best to do this. BLITZER: In this market, $20 million, they're probably not going to get that, but they will get something. And we will see how much they get.

Abbi, thanks very much.

Jack Cafferty has got "The Cafferty File."

He's joining us now.

Interested in any of those properties, Jack?

CAFFERTY: I was -- Wolf, I was just thinking, you should pick up one or two of those, have a little seaside...

BLITZER: Yes, maybe the one in Palm Beach, and -- that little -- that little villa in Palm Beach.

CAFFERTY: Yes, little villa. And then you could have THE SITUATION ROOM staff come down, you know...

BLITZER: Yes. That would be nice.

(LAUGHTER)

CAFFERTY: ... on vacation and stuff.

BLITZER: Yes.

(LAUGHTER)

CAFFERTY: It would be nice.

(LAUGHTER)

CAFFERTY: The question this hour, should the United States spend a few years in combat in Afghanistan.

Eliseo writes from San Juan, Puerto Rico: "There are reasons why Afghanistan may or may not be worth the money and lives projected to be spent and lost there. They have to do with gas and oil supply lines from Azerbaijan and Kazakhstan. I want to know why we are not being told. Is that in itself significant? Did some public relations guy in the Pentagon decide to keep it simple and mention only al Qaeda?"

Judie from Texas writes: "Same deal, different year. Once again, the American public being told one thing, when, in fact, something far different is taking place. No one will define a few years. Perhaps worded differently, the same applied, especially to Vietnam and Iraq."

M.L. in El Paso, Texas: "Like ants, the Taliban keep moving, charging and killing, and American lives will continue to be sacrificed. For what? I would like President Obama to tell the American people very specifically what we are doing in Afghanistan. More importantly, do the people of Afghanistan want us there, or do they want us out?"

Jon in California: "Everyone knows the war on terror was going to be long and tough, but spending years in one Middle Eastern country, and then spending a few more years in another is just plain ridiculous. Clearly, tactics aren't working, if it takes this long."

Ryan in Wisconsin: "We got ourselves into this mess. We need to see it through. It would be irresponsible for the U.S. to just up and leave."

And Megan in Fort Polk, Louisiana: "My husband is in the Army, comes home from a 15-month tour in Iraq sometime next month. Maybe we should ask my two kids if the wars in the Middle East should continue. There should be a point when the American people say, enough is enough. As to when that point will come, who knows? A few years is a few too long, if you ask me."

If you didn't see your e-mail here, go to my blog, CNN.com/caffertyfile. You can look for yours there, among hundreds of others -- Wolf.

BLITZER: Jack, thank you.

To our viewers, you're in THE SITUATION ROOM.

Happening now: He calls his prison term for dogfighting a turning point. Now quarterback Michael Vick is getting a second chance in the National Football League.

President Obama holds a town hall in a small Montana town. I will speak with the governor of Montana, who worries states will get stuck with the tab for health care reform.

And Newt Gingrich has some advice for Sarah Palin: Write a book, get a condo in New York or Washington, and work really, really hard.